Posted on April 21, 2012 by Dominic Canterbury
In the startup world there are a lot of misconceptions about what exactly a target market is, how to identify one and what you should do with it. And all too often the target is thought of as something that should be figured out after the product is built.
This thinking is absolutely backwards and has undoubtedly caused many otherwise great startups to completely fail.
In reality, the selection of your target market is the most important decision you will make. Your target should be determined before any code is written and even before any business decision is made. And once decided upon, your target should guide every subsequent decision you make.
Why is the target so important?
It’s important because you need to know the exact problem you’re solving, exactly who has that problem and how they want it solved. Otherwise you’ll end up targeting “people,” and having serious yet meaningless conversations about “what people want.”
Think of it this way, if you created a product that the average person wanted, it would be 10% ultra conservative, 10% radical liberal, mostly straight, a bit gay and liked by nobody.
In contrast, the product worth building is one that’s better than anything else in the world at solving a significant problem for a specific and accessible subset of people.
But how do you identify such a group and how do you evaluate which groups are better targets than others?
In the ten years I’ve spent in marketing and public relations, I’ve seen hundreds of targeting strategies play out. And after a while a very clear pattern emerges that differentiates the successes from the failures.
One of the first things you’ll see is that demographic targeting is entirely useless. There was a time when it made sense to narrow your focus by age, race, income, location, etc. But not anymore. If you’re marketing to a demographic, you’ll end up spending a lot of cash just to put an irrelevant message in front of an audience who could care less.
These days, targeting is about one thing: real people with real needs.
It’s one thing to make such a declaration, but it’s another to turn that into a target market worth basing your business on.
Here’s how you do it.
A strong target market comes down to three, and only three, variables: Needs, Hubs and Quantity.
Let’s take them one at a time.
This gets at the fundamental driving question, “What problem are we solving?”
So often when answering this question, founders treat it as though problems just somehow exist in the world but the reality is that problems exist only within the minds of actual people. So to solve a real problem it is absolutely essential to understand the people who have that problem. You have to get to the point where you can clearly imagine how your product fits into their day, how it makes them feel, how it makes them more productive in their daily lives or even how it makes them more attractive to their preferred gender.
If you can clearly define that pain point and you can scope out a clear and simple solution, then you probably have something worth building. Otherwise, don’t bother.
To put it in quantifiable terms, think about the type of person would love your solution more than anybody else, and rank their response on a scale of 1-10 with 1= “That might be useful” and 10= “Thank god this exists.”
If you’re not reaching 8+, you need a better target, a better product, or both.
If you reach 8+ on Needs, then go on to the next two test, both of which are designed to determine if this profound problem is worth solving.
For your target to be viable, you have to be able to reach them. Fortunately these days, people tend to connect based on their needs and if you really solve their problem, they’ll be eager to share you with their networks.
For this you’re looking for any kind of influencer with a wide reach that your target trusts and that is accessible to you.
Some possible hub types include:
- Trade publications
- Online or offline groups
- Professional associations
- Membership clubs
- Social Networks
- Prominent individuals
Such hubs are important because they will become your marketing channels when you’re ready to launch.
On a scale of 1-10, 1= “Yeah, I bet most of my targets use Facebook” and 10= “WOW. There’s like 100 major hubs and I could easily get to any one of them.”
If you scored 8+ on Needs and Hubs, there’s just one final test to verify this target is worth it: Quantity.
For this test, you’re just making sure you didn’t target too narrowly. To evaluate Quantity, make sure to take into account how many you can plausibly reach and how many of them are likely to pay your price for your solution.
On a scale of 1-10, 1= “Seems like there are quite a few” and 10= “My god, there are more of these people than I’d know what to do with.”
And that’s all there is to it.
When you find a target that reaches 8+ on all three variables, something really fascinating happens. Your entire strategy becomes abundantly clear. You’ll know exactly what problem you’re solving, what features to build and how to reach throngs of people who would love your product.
On the other hand, if you’re scoring lower on any of these points, you’re going to face a costly uphill battle that you might not be able to win.